Check out the key picks for this week by SaxoStrats team
STOCK FOCUS – Alibaba Group Holding Ltd
- Alibaba's results last week were closely given that most of the Chinese tech stocks who have reported so far have failed to meet expectations, confirming the fact that the Chinese economy has slowed somewhat.
- The valuation of Chinese tech has been extreme relative to the US. Historically a basket of Chinese tech companies trades at a valuation premium to US tech. Now that actual growth is no longer meeting expectations we are seeing a repricing across the sector as a whole which presents opportunities for investors.
- Alibaba enjoys a dominant position in the Chinese market and has increased its footprint both domestically as well as into new markets, leaving it firmly placed for expansion in the coming years.
- Call Spread: Options traders looking to exploit a moderate bounce in ‘Ali’ could consider a bull call spread. However, if the stock fails to move up sharply you could make very little or lose your premium.
- Put Sell: If you are taking a more market neutral approach selling out of the money puts could be a good strategy. Provided Alibaba stock does not trade below the strike price before expiration you will retain the premium, if the stock trades below the strike price you be assigned 100 shares for each contract sold.
- TRADE YOUR VIEW WITH SAXO – Alibaba Group Holding Ltd [BABA:xnys]
STOCK FOCUS – The a2 Milk Company Ltd
- A2 Milk Expects further Revenue Growth After 68% Surge in FY18 revenues
- The stock has been under pressure since May after missing expectations but the quarterly result and updated FY19 guidance delivered today should encourage investors. Full year net profit rose 116%
- Sales of a2 Platinum infant formula again grew substantially in Australia and China, with continued growth in market share.
- Overheads are increasing but this is only to support the growth of the company which shareholders will continue to benefit from.
- TRADE YOUR VIEW WITH SAXO – The a2 Milk Company Ltd [A2M:xasx]
STOCK FOCUS – Ping An Insurance Group Co. of China Ltd
- Ping An announced its interim results. Net profit increased by 33.8% yoy to RMB 58.095 billion, higher than expected RMB 50 billion . Earnings per share was 3.26 yuan. Total revenue was 587.415 billion yuan, 16.7% increase yoy.
- At the end of June, the comprehensive solvency adequacy ratio was 217.3%, an increase of 2.4 percentage points from the end of last year. The comprehensive solvency adequacy ratio of Anshou Insurance was 228%, down 6.1 percentage points from the end of last year.
- TRADE YOUR VIEW WITH SAXO – Ping An Stock and options [02318:xhkg]
Commodities FOCUS – Oil
- Oil prices were supported by weaker USD as well, and partly helped by big withdraw from API report and market is expecting withdraw from EIA report as well.
- The news that US is planning to sell strategic oil reserves raised further concerns on tightened global supplies, and provided some headwinds to the prices.
- Active contract shifted and now is trading below a key trend line connecting feb and jun lows, further testing of the line is expected.
- TRADE YOUR VIEW WITH SAXO -
Light Sweet Crude Oil (WTI) – [CLV8]
Long Oil - United States Oil Fund [OSU:arcx]
Short Oil – ProShares UltraShort Bloomberg Crude Oil [SCO:arcx]
Weekly Most Traded A-shares*
|Stock Code||Stock Name||Saxo Code||Average Daily |
RMB (16-22 Aug)
|000063 CH Equity||ZTE CORP-A||000063:xsec||3,386,286,667|
|600519 CH Equity||KWEICHOW MOUTA-A||600519:xssc||3,330,308,000|
|601318 CH Equity||PING AN INSURA-A||601318:xssc||2,458,015,000|
|600050 CH Equity||CHINA UNITED-A||600050:xssc||1,970,877,667|
|600309 CH Equity||WANHUA CHEMIC-A||600309:xssc||1,829,389,500|
|000858 CH Equity||WULIANGYE YIBI-A||000858:xsec||1,759,182,333|
|600276 CH Equity||JIANGSU HENGRU-A||600276:xssc||1,731,002,000|
|600536 CH Equity||CHINA NATIONAL-A||600536:xssc||1,614,233,333|
|002027 CH Equity||FOCUS MEDIA IN-A||002027:xsec||1,454,322,667|
|000651 CH Equity||GREE ELECTRIC-A||000651:xsec||1,354,545,000|